Europeans opposed to Canada’s ‘negative-list’ approach to trade

PARIS – The Canada-European Union free trade talks have hit another
snag due to the continued reluctance of some EU member states to negotiate a
wide-ranging agreement to liberalize trade in services.

The delay is raising questions about whether the tabling of formal offers,
which was supposed to take place last week in Brussels but was then rescheduled
for the next round of negotiations in Ottawa in April, could be hit with
further complications.

Trade Minister Peter Van Loan, who has vowed that a trade deal will be
completed by the end of 2011, states regularly that the deal will boost
Canada’s economy by $12 billion annually and boost two-way trade by 20 per cent.

The joint 2008 Canada-EU study Van Loan relies on for those figures
projected that close to half of those gains for Canada would result from a
liberalization of trade in services, in areas such as law, engineering, the
financial industry, and the energy sector.

Canada is pushing for a “negative” list, which means that all services
will be liberalized except those specifically identified. Canada has
historically included water services, public education, and health and social
services as exempt sectors in past trade agreements.

Europe has always used a “positive” list in which all sectors and sub-
sectors being liberalized are spelled out in the agreement.

Canadian and European industry groups advocate a negative list, since it
deals with unforeseen services that will emerge in the future. It is also
believed that a negative list approach will lead to a broader and more “ambitious” agreement.

"It is disappointing that a negative list approach to services, a key
Canadian ask and, if agreed, a first for the EU in a bilateral trade
negotiation, has not yet been approved,” said Jason Langrish, executive
director of the Canada Europe Roundtable for Business lobby group.

While he voiced optimism that the delay won’t translate into a “no,”
Langrish said he fears Europe’s hesitation will give more time for Canadian
provincial governments to “reconsider their offers in other areas, which we
understand they are in a position to table.”

European Commission spokesman John Clancy said the concerns of “a number”
of EU states about the negative list shouldn’t affect the negotiations
timetable.

A European Council official told Postmedia News that the EC’s trade policy
committee agreed in October to support a negative list for “Mode 3” services,
in which a service sector company like a bank establishes a foreign presence
with a subsidiary.

At the same meeting the committee members decided to oppose “Mode 4”
services, which involves individual businesspeople from one country travelling
to another to provide services.

Canadian trade lawyer Milos Barutciski said the Mode 4 services area is
politically sensitive because of current concerns in Europe over immigration.

But some EU member countries decided last week they need more time to
consider the implications of accepting Mode 1, which involves cross-border
services offered by Internet, fax or email, and Mode 2, which involves people
travelling to another country to receive a service like medical treatment or
education.

Pascal Kerneis, of the European Services Forum in Brussels, said some member
states have a fear of the unknown regarding a loose regime for Internet/email
services.

Part of the concern is that legitimate online services might emerge that
pose serious threats to the viability of domestic sectors, he said. But there
are also jitters that dubious online services, particularly in the financial
sector, would be harder to regulate or prohibit under such a negative list
regime.

But Kerneis said a negative list is still the best route to take because it
lessens uncertainty for corporations and eliminates the need to re-negotiate
the trade agreement to deal with future developments.

“More than 50 per cent of services that we and our children are going to
consume in 50 years have not yet been invented,” he said.

A spokesman for the Council of Canadians, a lobby group critical of Canada’s
free trade agenda, said European’s position could ultimately be good for
Canadian interests.

Stuart Trew said the negative list approach is intended to put pressure on
Canadian provincial governments to open up sensitive areas, like water services,
to European competition.